Myanmar Thilawa SEZ Holdings (MTSH)

Transcription

1 Myanmar Thilawa SEZ Holdings (MTSH) Company Update Non rated (16/17E TP Kyat 43,350) Closed Price Kyat50,000 Industrial Park Development July 21, 2016 Announced FY2015/16 DPS at 2,500 Kyat, implying a 5% yield 16/17E TP set at Kyat 43,350 based on MTSH forecasts Based on MTSH s 2016/17E EPS forecast of Kyat3,940, we estimate its target price at Kyat43,350 based on 2016/17E PER of 11 (implying a 35% discount from the historical PER of Asian Industrial Estate developers of 17X), given the company s negative 2016/17E earnings growth of 25.9% YoY and soft growth of 4.7% in 2017/18E compared with regional peers at average E earnings growth of 34.3% YoY and 27.6% YoY, respectively. Share data Paid up Shares (shares) 3,892,915 No. of shareholders 16,720 Par (Kyat /US$) 10,000 / 7.69 Market cap (Kyat bn / US$ mn) 190,753 / 146 URL Index MTSH 1,400 80,000 1,300 1,200 70,000 1,100 60,000 1, , , MYANPIX INDEX 600 MTSH 30, , Mar 16 8 Apr Apr 16 6 May May 16 3 Jun Jun 16 1 Jul Jul 16 Worarat Powpaka Analyst, no woraratp@ktzmico.com 66 (0) FY2015/16 earnings rose 27.7% YoY, mainly from other income MTSH reported FY2015/16 net profit at Kyat20.7bn, increasing 27.7% from FY2014/15. This was mainly from higher total revenue to Kyat9.82bn from Kyat3.96bn in FY2014/15 or increasing 148% YoY. The source of revenue derived from MTSH s net management fees and sales commission fees from marketing and selling the Thilawa Zone A of Kyat2.7bn (+36.4% YoY) and other income of Kyat6.41bn, which included exchange gain of Kyat6.08bn resulting from the difference between the exchange rate of the USD to the Kyat on the transaction date of the dividend received and the exchange at the closing accounting date. Meanwhile, the share of profit from MTJD was flat at Kyat14.76bn (+2.9% YoY). MTSH projects FY2016/17E earnings to fall 25.9% YoY MTSH projects FY2016/17E net profit at Kyat15.3bn, which will decline 25.9% YoY. This will mainly be from the reduction of MTSH s sales commission and management fees along with the decrease of shared profit from MTJD to Kyat8.2bn ( 44.3% YoY) on the deterioration of land available for sales in the Zone A project. Meanwhile, the company expects Thilawa Property Development (TPD) s revenue at Kyat39.1bn as TPD will recognize revenue from projects on a percentage completion basis. The company s average gross margin will be 29.1% and the SG&A to revenue ratio will be 4.8%. Announced FY2015/16 DPS at 2,500 Kyat, implying a yield of 5% MTSH announced a FY2015/16 DPS at 2,500 Kyat, implying a dividend yield of 5%. The stock will go XD on July 27, Financials and Valuation Prepared by MTSH FY Ended 31 Mar FY13/14 FY14/15 FY15/16 FY16/17E FY17/18E Revenues () 0 1,992 2,716 40,749 56,167 Net profit () (464) 16,212 20,700 15,339 16,056 EPS (Kyat) (393.29) 4, , , , EPS growth (%) n.a. n.a (25.9) 4.7 Dividend (Kyat) 0 2,000 2, BV (Kyat) 9,607 14,045 18,897 17,302 19,814 FY Ended 31 Mar FY13/14 FY14/15 FY15/16 FY16/17E FY17/18E PER (x) n.a EV/EBITDA (x) n.a PBV (x) n.a Dividend yield (%) ROE (%) Net gearing (%) (8.2) REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4

2 Figure 1: Consolidated revenue segments 59,500 49,500 39,500 29,500 19,500 9,500 MTSH Net sales commission&management fees Revenue from TPD Other income Total revenue Share of profit/ (loss) of joint venture Figure 2: Consolidated revenue proportion 60,000 50,000 40,000 30,000 20,000 10,000 0 MTSH Net sales commission&management fees Revenue from TPD Other income Figure 3: MTSH s earnings forecasts excluding TPD & MTJD 5,500 4,500 3,500 2,500 1, Figure 4: TPD s earnings forecasts 12,000 10,000 8,000 6,000 4,000 2,000 0 Figure 5: Share of profit (loss) of joint venture (MTJD) 17,500 15,500 14,347 14,757 13,500 11,500 9,500 8,217 7,617 7,500 5,500 3,500 1, Figure 6: Consolidated earnings forecasts by MTSH 19,000 17,000 16,212 16,056 15,339 14,617 15,000 13,000 11,000 9,000 7,000 5,000 3,000 1,000 1, REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4

3 FINANCIAL TABLE FY Ended 31 Mar PROFIT & LOSS () 2013/ / /16 Revenues 0 1,992 2,716 Cost of sales and service Gross profit 0 1,992 2,716 SG&A (369) (1,391) (1,999) EBITDA (349) 2,543 1,824 Depreciation & amortization EBIT (353) 2,509 1,735 Interest expense Other income / exp. 16 2,027 1,021 EBT (464) 16,856 22,575 Corporate tax 0 (645) (1,902) Forex gain (loss) Extra Items 0 0 6,083 Gain (loss) from affiliates (111) 14,347 14,757 Net profit (464) 16,212 20,700 Reported EPS (393) 4,164 5,317 Fully diluted EPS (393) 4,164 5,317 Core net profit (464) 16,212 14,617 Core EPS (393) 4,164 3,755 Dividend (Kyat) 0 2,000 2,500 BALANCE SHEET () 2013/ / /16 Cash and equivalents 14,674 13,013 26,734 Accounts receivable 1,239 2, Inventories PP&E net Other assets 0 16,930 28,391 Total assets 23,177 57,463 81,665 ST debt & current portion Long term debt Total liabilities 11,851 2,786 8,101 Paid up shares 11,790 38,929 38,929 Shareholder equity 11,326 54,677 73,564 Total liab. & shareholder equity 23,177 57,463 81,665 CASH FLOW () 2013/ / /16 Net income (464) 16,212 20,700 Forex and other extraordinary adjustments 111 (13,702) (12,881) Depreciation & amortization Change in working capital (1,229) (15,985) (10,736) Cash flow from operations (1,578) (13,440) (2,827) Capex (Invest)/Divest (7,379) (3,852) 19,783 Others Cash flow from investing (7,379) (3,852) 19,783 Debt financing (repayment) Equity financing 23,631 15,298 0 Dividend payment 0 0 (7,786) Others Cash flow from financing 23,631 15,298 (7,786) Net change in cash 14,674 (1,994) 9,169 Free cash flow (8,957) (17,937) 730 FCF per share (Kyat) (7,597.54) (4,607.71) PROFITABILITY 2013/ / /16 Revenue growth (%) n.a. n.a EBITDA growth (%) n.a. n.a. (28.3) EPS growth (%) n.a. n.a Gross margin (%) n.a EBITDA margin (%) n.a Operating margin (%) n.a Net margin (%) n.a Core profit margin (%) n.a Effective tax rate (%) n.a. (3.8) (8.4) REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4

4 Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY. KT ZMICO is a co underwriter of ALT, EKH. Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: ) Satisfactory (scores: 60 69) Very Good (scores: 80 89) Pass (scores: 50 59) Good (scores: 70 79) No Logo N/A (scores: below 50) Anti corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) Level 1 (Committed) : Organization s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user. KT ZMICO RESEARCH RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between 10% to +15%; returns expected to exceed market returns over a six month period due to specific catalysts UNDERPERFORM: Expecting total returns between 10% to +15%; returns expected to be below market returns over a six month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months. REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4

5 KT ZMICO Securities Company Limited 8 th, 15 th -17 th, 19 th, 21 st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok Telephone: (66-2) Fax. (66-2) Phaholyothin Branch 3 rd Floor, Shinnawatra Tower II, 1291/1 Phaholyothin Road, Phayathai, Bangkok Telephone: (66-2) Fax. (66-2) Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang, Nakhon Pathom Province Telephone: (034) Fax: (034) #100 Chachoengsao Branch 108/34-36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao Telephone: (038) Fax. (038) Khon Kaen Branch 5 th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen Telephone: (043) Fax. (043) Central World Branch 999/9 The Offices at Central World, 16 th Fl., Rama 1 Rd, Pathumwan, Bangkok Telephone: (66-2) , (66-2) Fax. (66-2) Pak Chong Branch , Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima Tel. (044) Fax. (044) Nakhon Ratchasima Branch 624/9 Changphuek Road,. Naimaung, A.Maung, Nakhon Ratchasima Telephone: (044) Fax: (044) Ploenchit Branch 8 th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok Telephone: (66-2) Fax. (66-2) Viphavadee Branch G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee-Rangsit Road, Ladyao, Jatujak, Bangkok Telephone: (66-2) Fax. (66-2) Chonburi Branch 4 th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi Telephone: (038) Fax. (038) Hat Yai Branch 200/301 Juldis Hatyai Plaza Floor 3, Niphat-Uthit 3 Rd, Hatyai Songkhla Telephone: (074) Fax: (074) Chiang Mai Branch 422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai Telephone: (053) Fax: (053) Cyber North Nana Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict, Wattana District, Bangkok Telephone: Sindhorn Branch 2 nd Floor, Sindhorn Tower 1, Wireless Road, Lumpini, Pathumwan, Bangkok Telephone: (66-2) Fax. (66-2) , Phitsanulok Branch Krung Thai Bank, Singhawat Branch 114 Singhawat Road, Muang, Phitsanulok Telephone: Pattaya Branch 382/6-8 Moo 9, T. NongPrue, A. Banglamung, Cholburi Telephone: (038) Fax. (038) Sriworajak Building Branch 1 st 2 nd Floor, Sriworajak Building, 222 Luang Road, Pomprab, Bankgok Telephone: (02) Fax. (02) Phuket Branch 22/61-63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket Tel. (076) ,(076) Fax. (076) Bangkhae Branch 6 th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok Tel. (66-2) Fax. (66-2) Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.